Trade policy is major concern for global executives

In a global survey of economic conditions in March 2017, McKinsey found that executives are more bullish about the global economy now than they were in 2016. McKinsey reports that overall, executives seem more optimistic about the prospects for the global economy, although geopolitical instability, politics and trade remain a threat to global growth. They survey is based on replies from more than 1,700 business executives from around the world.

Top potential risks to the global economy

Changes to trade policy is a concern for 40 per cent of the survey's respondents and is one of the top three potential risks to the global economy in the next 12 months, as shown in the graph below:

Confidence in domestic growth

Executives in North America were least optimistic about trade levels between their region and the rest of the world: 52 per cent predict trade between their home countries and the world will decline in the next year, compared with a global average of 35 per cent. However, the respondents were more positive about domestic conditions and in North America 58 per cent reported better conditions compared to six months ago, as shown in this graph:

Trade policy seen as increased risk

The survey also showed that company-level risks have shifted in the past 12 months. A year ago, the most commonly cited risks were changing consumer needs, low demand and scarcity of talent. The main risks cited by executives in March 2017 were:

changes in the business and regulatory environment;

changes in the trade environment;

decreasing demand;

changing consumer needs; and

scarcity of talent.

CTMFile take: It's no wonder that perception of risk has shifted significantly in the past 12 months and that business executives are now more focused on changes in trade policy and in the regulatory environment, compared to a year ago.